The China market is progressive in many ways.
If you have been following the market trends – in general, and also in the internet sector for many years – you have probably seen the transformation of how domestic and global companies operate.
The way they do business, how they capitalize resources and talents, and how they maximize their knowledge and experience of the market—only show that global companies should be equipped before they expand in the Mainland and even overseas.
What was once known as the manufacturing hub of the west is becoming an innovation superpower as World Economic Forum put it.
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With 751 million internet users as of July 2022 and a whopping 54.3% internet penetration, which is 1.1.% higher than in 2021, global companies should never overlook digital marketing and “Internet-centric” approach strategies to engage with their audience effectively.
Let’s take a look at the latest trends below and may this list serve as a guide for global companies, an overview of the market, and what to expect in the next few years.
1. Cashless society via mobile payments
China is already living in the future with its cashless society powered by mobile payments in WeChat. And this trend will continue to grow as two payment giants, AliPay and WeChatPay, have further consolidated their popularity as the South China Morning Post put it, which are the preferred payment options among China’s wealthiest individuals.
Mobile payments have made the lives of residents more convenient when making transactions in Chinese cities. Whether they are shopping online, buying from small-scale vendors and convenient stores, or paying their dinner in a fancy restaurant, all it takes is a few taps and money is transferred quickly.
2. Lower-tier cities are growing and are catching up with e-commerce
There is a high saturation of mobile usage and e-commerce sector in megacities. However, this doesn’t mean that global companies should stop exploring other cities. In fact, consumers in lower-tier cities are growing and are expected to spend more. According to Morgan Stanley’s report, their expected spending power could reach up to U$9.7 trillion dollars by 2030.
Global companies should watch out for these small cities, which are likely to drive growth in the next few years. These lower-tier cities provide opportunities for investors and global entrepreneurs, especially those that are in the consumer goods, domestic autos, travel, entertainment, and gaming industries.
Xuzhou and Nantong in the east, Quanzhou in the south, or Baoding in the north are some of the places that will drive national consumption, Robin Xing, China Chief Economist said.
3. Live streaming is another way to promote products and services
As consumers become more digitally savvy and connected online, global companies need to diversify their marketing channels to engage with their target audience. Live streaming, China’s booming industry, may have reached its zenith. And although there are regulatory hurdles and rising costs involved, the luxury market can capitalize on this channel with the right strategy.
Leading luxury brands had started exploring this channel, and many advertising companies also take advantage of this model aside from the traditional video promotions. Louis Vuitton, Gucci, Dior, and among others offered live streams of their fashion shows across the main social media channels.
4. Domestic brands are becoming popular
The domestic brands have started innovating and creating their products and services, which are becoming popular in the Mainland and outside of China. We say goodbye to China’s former identity as being a copycat, but rather the rise of these domestic brands prove that they can compete on a global scale.
This smartphone advertisement from AGM-X2 is hilarious, yet it’s something a digitally savvy millennial would love to buy. And despite China still struggling to build a global fashion brand, it can thrive within its borders as the middle-class’ income grow and talented fashion designers in Shanghai are making it big in the industry.
5. Sharing economy a booming industry and attracting financial growth
Sharing economy is a booming industry is attracting more investors, which garnered US$778 billion of transactions in 2017. The market is also attracting financial growth where investment volume rose 25.7 percent in 2017. Popular ridesharing company Didi Dache remains the leading player in the transportation sector, beating Uber in the domestic market, which resulted in acquiring the latter in 2016.
Young Chinese consumers are embracing the sharing economy and are eager to pay for the services and spend money on experiences rather than tangible things according to Euromonitor. As on-demand services grow, localize sharing economy such as bike sharing is one of the growing markets. Ofo and Mobike are two major players in the bike sharing and had already expanded outside of Mainland.
6. The rise Copy to China (C2C) business model in IT sector
You have probably come across the phrase “the Google of China” or the “Twitter of China” in various articles. These platforms exist because domestic companies such as Baidu who owns the most popular search engine in China understand the market better than their foreign counterparts. The tech-giants, also known as BAT – Baidu, Alibaba, and Tencent – localize the western business model to suit the needs of the consumers.
C2C business model refers to a company in China that copies the successful foreign company and then the degree of copying varies as to ensure it matches the needs of the local market, particularly touching the Chinese IT industry. The rise of C2C also fueled the growth of e-commerce and sharing economy.
While some may see this as nothing but “copying,” it’s an interesting topic of discussion how companies in China move beyond the copying and localization into innovation of their products and services.
Who else can create a seamless payment method and where you can almost do anything and everything within an app than Tencent?
7. WeChat remains the “King of the Hill and invincible
There’s no doubt that WeChat remains the King of the Hill when it comes to mobile app usage. Known as the Swiss army knife app where you can do almost anything and everything within the app, what makes it invincible is that Tencent is smart enough when it comes to diversifying its services.
Aside from being customer-centric with a ton of new updates and features, which lock the user to almost do anything – and even have a conference call – just within the app, it offers a variety of mobile marketing options for business owners such as ads, pop-up programs, games, and mini-programs app.
Tencent is so good at building its user base that it’s so hard for companies not capitalize its technology and robust data.
8. The booming domestic and outbound tourism
The travel and tourism sectors offer opportunities for global companies as annual records keep on increasing. The Spring Festival this March was reported to have 6.5 million travelers, the highest record number ever according to Ctrip, China’s biggest online travel platform. Many travelers prefer traveling overseas as their income increases.
This trend is an opportunity for the travel and tourism companies to explore new opportunities even if they’re not operating in China. As more Chinese travelers spend money overseas, localization of the marketing channels, products, and services is not bound by location.
Their customers may be right in front of their shops.
9. China’s online education sector and the middle-class anxiety
Learning the English language is not an option for the middle-class especially now that China is becoming an influential global leader in many sectors. One of the middle-class anxiety as the academic circles put it, is that they might be left behind by their peers who are proficient in English. This pressure arises from a constant fear where some of their peers get ahead of the game as globalization takes place.
“Most important of all, many people worry that the worth and utility of their knowledge and qualifications could erode due to thriving technological progress, globalism, and entrepreneurship,” China.org wrote.
“This sentiment of continuous progress is propelling young white-collar workers toward a long-term remedy: education,” said Du Miaomiao, an analyst at consultancy iResearch.”
10. Artificial intelligence (AI) and augmented reality (AR) to become a reality slowly
The artificial intelligence/AI and augmented reality/AR sectors are still nascent in China market. And while many domestic companies still struggle how to harness these technologies in their business models, Chinese attractions have invested in AR to engage with the customers.
“More than anywhere else in Asia, China has grasped the power of technologies such as holograms and augmented reality to engage a generation of travelers seeking new thrills. At least 17 billion yuan ($2.7 billion) of venture capital poured into the nation’s travel sector in the two years through 2016,” Lulu Yilun from Bloomberg wrote.
Aside from travel and tourism, the gaming and entertainment sectors may experience more of this technology as companies continue to innovate and explore this technology. For example, AI technology is being integrated online and offline games, which allows gamers to enjoy both digital and real life like the Werewolf and Walkup games developed by Chinese companies.
Chen Yang, the founder of Walkup, said, “The gamification of a product is the future trend. In the game, we establish a motivating mechanism, encouraging users to exercise offline. In their daily routine, users enjoy the game, interact with their friends and achieve their goals of exercising every day. This is how we gain user loyalty.”
